New York, March 02, 2007 -- As part of the planned application of its joint default analysis (JDA)
methodology and its updated bank financial strength rating (BFSR) methodology,
Moody's Investors Service today published the rating results for banks
in the United States.
In February 2007, Moody's published a Special Comment, entitled
"Incorporation of Joint-Default Analysis into Moody's Bank
Rating Methodology". The JDA methodology identifies four potential
sources of external support for banks:
(1) parental support,
(2) support from a cooperative or mutualist group,
(3) support from a regional or local government, and
(4) systemic support.
The methodology uses Moody's JDA to increase the transparency of
Moody's bank ratings. Starting with a bank's BFSR,
the methodology uses Moody's rating for each relevant support provider,
together with estimates of the probability of extraordinary support from
each supporter and the default dependence between the bank and that supporter,
to determine the bank's deposit rating. Bank debt ratings
are then determined based on Moody's standard notching guidelines,
although in some countries certain debt obligations may receive less systemic
support than deposit obligations.
Also in February 2007, Moody's published its updated BFSR
methodology, entitled "Bank Financial Strength Ratings:
Global Rating Methodology". BFSRs evaluate the stand-alone
financial strength of banks without reference to external support factors.
Moody's said that the methodology enhances both the transparency and consistency
of this type of rating.
As Moody's announced when it published the final methodologies,
given the large number of issuers potentially affected, the methodologies
are being implemented country by country, with results being announced
on a weekly basis. For those banks with a parent bank located in
another country where the methodologies have not yet been implemented,
we have only concluded on the bank subsidiary's own BFSR.
Because these banks may potentially benefit from support from the parent
bank, among other potential sources of support, there may
be changes to the deposit and debt ratings at such banks when we conclude
on the parent's ratings.
Due to the extensive number of issuers and issues, in this press
release we are only listing the names of the issuers whose ratings have
been changed, affirmed or put on review. For a complete list
of bank ratings that have been changed or put on review, please
click on the link that will refer you to the document entitled "List
of Banks and Ratings Affected by JDA and Updated BFSR Rating Methodologies".
This list will be posted on the JDABanks page in Moodys.com (www.Moodys.com/JDABanks)
and reflected on individual bank pages this weekend after all rating changes
have been processed.
The rating agency noted that in the United States only a few banks receive
any ratings benefit from potential government support, reflecting
Moody's view that the US is a "low" support country.
That said, Moody's assigned a 98% probability of government
support to JPMorgan Chase based on the bank's strong deposit shares,
extensive derivatives operations, and role as a major government
securities clearer. Due to the importance of these operations to
the US financial system, the potential disruption to the financial
markets from any failure or default by such an institution would be massive,
and for this reason Moody's assigns this virtually certain support
assumption. At this level of support both deposits and other credit
ratings are affected, causing a two notch upgrade of bank deposit
and senior debt ratings (to Aaa), but only a one notch upgrade of
bank subordinated debt and and holding company ratings (to Aa2).
This reflects Moody's view that support is less likely for subordinated
bank debt and bank holding company obligations in the US. For Bank
of New York, also a major government clearer, Moody's
believes that the probability of support is only modestly lower,
at 95%, which serves to lift the senior credit ratings of
the bank (also to Aaa), but not subordinated obligations or ratings
at the holding company.
The deposit and senior debt ratings of State Street Bank were also raised
(to Aa1). Moody's assigned a 70% government support
probability because of the bank's dominance in mutual fund servicing
in the US. The upgrade of deposit and senior debt ratings of Wachovia
reflect its very strong deposit market shares in the US. Because
of the importance of the bank's franchise, the rating agency
incorporates a 70% likelihood of government support.
Moody's also upgraded to A from A- the financial strength
rating of Bank of America a result of its powerful market franchise and
substantial earnings power, supported by the successful integration
of two large acquisitions. Consequently, all of Bank of America's
bank and holding company ratings were raised, with deposits and
senior obligations of the bank going to Aaa. Moody's views
likely government support for Bank of America as very high, at 95%,
because of the bank's number one deposit market position.
Nevertheless, this assumption has no bearing on Bank of America's
ratings, which are already at the highest rating levels based on
its stand-alone financial strength.
For Citibank and Wells Fargo, Moody's ascribes potential support
of 98% and 70%, respectively. However,
these banks also carry financial strength ratings of A, so such
support has no impact on their credit ratings.
The BFSRs of many community and regional US banks also were raised.
These changes are intended to improve the global consistency of Moody's
BFSRs and are a direct result of Moody's updated BFSR methodology.
In Moody's view, community and regional banks have a straightforward
and sustainable business model. It is centered on serving consumer
and commercial customers by gathering deposits and making loans within
a defined geographic region, typically through a branch network.
US community and regional banks' generally solid market shares allow them
to generate healthy margins. That, in turn, gives the
banks the ability to compete on service with larger banking organizations.
For these banks, Moody's ascribed no systemic support.
Yet, their higher financial strength ratings map to higher baseline
credit assessments, which caused upgrades to deposit and other credit
ratings.
Below is a list of the banks and/or bank holding companies with banks
whose ratings and/or outlooks have been changed:
American Express Bank, FSB
American Express Centurion Bank
American Savings Bank, FSB
Associated Banc-Corp
Astoria Financial Corporation
BancorpSouth, Inc.
Bank of America Corporation
Bank of Hawaii Corporation
Bank of New York Company, Inc. (The)
BMW Bank of North America
BOK Financial Corporation
Capital One F.S.B.
Chevy Chase Bank F.S.B.
Chittenden Corporation
Citizens Republic Bancorp.
Citibank (South Dakota), N.A.
City National Corporation
Colonial BancGroup, Inc. (The)
Commerce Bancorp, Inc.
Commerce Bancshares, Inc.
Countrywide Bank, National Association
Cullen/Frost Bankers, Inc.
Downey Financial Corporation
First BanCorp Puerto Rico
First Citizens Bancshares, Inc.
First Midwest Bancorp, Inc.
First National Bank of Omaha
First Republic Bank
FirstMerit Bank, N.A.
Goldman Sachs Bank USA
Greater Bay Bancorp
Hancock Holding Company
Harris Bankcorp, Inc.
Hudson Valley Bank
Independent Bank Corporation
Indymac Bancorp. Inc.
Integra Bank Corporation
INTRUST Financial Corporation
Investors Bank & Trust Company
JPMorgan Chase & Co.
Mellon Financial Corporation
Merrill Lynch Bank USA
Morgan Stanley Bank
New York Community Bancorp, Inc.
Old National Bancorp
Pacific Capital Bancorp
People's Bank
PNC Financial Services Group, Inc.
Popular, Inc.
RBC Centura
Sky Financial Group, Inc.
South Financial Group, Inc. (The)
State Street Corporation
Susquehanna Bancshares, Inc.
SVB Financial Group
TCF Financial Corporation
TD Banknorth Inc
Trustmark Corporation
U.S. Bancorp
United Bankshares
United Commercial Bank
Valley National Bancorp
Wachovia
Washington Mutual, Inc.
Webster Financial Corporation
Whitney Holding Corporation
Wilmington Trust Corporation
Zions Bancorporation
Below is a list of the banks and/or bank holding companies with banks
whose ratings have been affirmed:
Amarillo National Bank
BB&T Corporation
Citibank, N.A.
Comerica Incorporated
Doral Financial Corporation
E*TRADE Bank
Fifth Third Bancorp
First Horizon National Corporation
Fremont Investment & Loan
Fulton Financial Corporation
Huntington Bancshares Incorporated
KeyCorp
LaSalle Bank Corporation
Marshall & Ilsley Corporation
National City Corporation
Northern Trust Corporation
Regions Financial Corporation
SunTrust Banks, Inc.
Synovus Financial Corp.
UMB Financial Corporation
Wells Fargo & Company
Below is a list of banks and/or bank holding companies with banks whose
deposit ratings are pending implementation for the parent:
Banco Bilbao Vizcaya Argentaria Puerto Rico
Banco Santander Puerto Rico
BancWest Corporation
Citizens Financial Group, Inc.
Compass Bancshares, Inc.
HSBC USA Inc.
M&T Bank Corporation
Sovereign Bancorp, Inc.
Texas Regional Bancshares, Inc.
UnionBanCal Corporation
Below is a list of the bank related hybrid securities whose ratings have
been changed:
Comerica Capital Trust II
KeyCorp Capital IX
Mellon Capital Trust III
National City Capital Trust II
SunTrust Capital VIII
USB Capital XI
Wachovia Capital Trust IV
Wells Fargo Capital X
New York
Gregory W. Bauer
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Rosemarie Conforte
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Announces Bank Rating Actions Resulting From Implementation Of JDA Methodology -- United States
